Article

Unlocking the Promise of Mobile Commerce

by Jason Yotopoulos | SAPinsider

October 1, 2011

Mobile commerce is enabling retailers and consumer products companies to engage with customers like never before, offering massive growth opportunities. However, consumer mobility has also intensified the pressure on retailers to redefine the shopping experience and deliver multichannel retailing, as well as to implement trade promotion management, traceable marketing spend, coupon program performance assessment, and other capabilities from the mobile world. This article explores SAP's project "Apollo," which aims to help companies in this endeavor.

Mobile commerce presents an unprecedented opportunity to engage consumers and deepen brand loyalty. Mobile devices are always on, are always at hand, and can provide real-time insights into consumer location and interactions. The potential reach is vast: According to some industry pundits, the number of smartphone users is expected to exceed 1 billion by 2016,1 and many of these users are engaging in mobile commerce. In July 2010, Amazon announced that its mobile sales topped US$1 billion during the previous 12 months, and eBay reported that consumers bought and sold US$2 billion worth of merchandise using their mobile devices during 2010.2 While these numbers represent a small fraction of retail sales worldwide today, shopping on the mobile web is forecast to grow to US$119 billion by 2015.3

For retailers and consumer products companies, consumer mobility offers exponential growth opportunities, yet it has also created new and changing consumer expectations. With smartphones and tablet devices using different platforms, such as Android, iOS, webOS, and BlackBerry, consumers have hundreds of thousands of applications to choose from, with functionality ranging from a price comparison to a location-based product search that redirects consumer traffic to specific stores. In turn, these mobile offerings intensify the pressure on retailers to redefine the shopping experience and deliver multichannel retailing, as well as to implement trade promotion management, traceable marketing spend, coupon program performance assessment, and other capabilities from the mobile world.

To capitalize on this opportunity and stay ahead of the competition, retailers and consumer products companies need an innovative business approach that can adapt to changing consumer expectations. SAP’s project “Apollo,” an offering that is currently in pilots with customers and is targeted for release in 2012, offers a solution that can help unlock the value of mobile commerce.

Seize the Mobile Opportunity with “Apollo”

Leading retailers and consumer products companies are embracing mobile marketing and digital advertising while leveraging the innumerable mobile applications available in different marketplaces. Many of these companies are undergoing a digital transformation by allocating marketing spend to personalized, multichannel interactions with consumers. And, as evidenced by their significant investments in ERP, legacy, customer relationship management, point-of-sale, and business intelligence systems, these companies recognize that real-time access to back-office systems is key to influencing consumer behavior and offering a personalized shopping experience. With its significant expertise in the retail and consumer products industries, experience running mission-critical transactional systems, and leadership in next-generation mobile technology through the acquisition of Sybase, SAP is uniquely positioned to address these requirements for its customers.

The Global Business Incubator group, which I lead within SAP, nurtures new lines of business that are adjacent to SAP’s core by bringing together small teams of entrepreneurs from inside and outside of SAP to work closely with customers and validate prototypes through a co-innovation approach. One such initiative is “Apollo,” which we have created in collaboration with a grocery chain and a cosmetics company. “Apollo” is a precision retailing solution that helps retail and consumer products companies transform their businesses to take advantage of the mobile opportunity by enabling them to interact with consumers at the exact time and place of a purchasing decision.

After speaking with SAP’s retail and consumer products customers, we found that consumers were walking into their stores, scanning product barcodes with their mobile devices, and then walking down the street to buy the product for a cheaper price somewhere else — not good for business! We decided to leverage the mobile devices that consumers carry to create a one-to-one relationship between SAP customers and their consumers. This enables retail and consumer products companies to use their SAP systems as a unique advantage over the competition by pairing their store-specific SAP application data about products, inventory, and customers in real time with information about what a particular customer is looking for, where, and when.

“Apollo”: A Closer Look

“Apollo” enables companies to target a segment consisting of a single consumer, delivering highly personalized messages, offers, and branded interactions to a unique user at a specific time and place. Figure 1 provides an overview of “Apollo” from the perspectives of retailers and consumer products companies, as well as consumers.

Figure 1

"Apollo” helps consumers shop smarter and enables retailers and consumer products companies to influence consumers at the point of decision and then analyze the results

To the consumer, “Apollo” is a personal shopping assistant that delivers rich product information, coupons, and special offers in real time through a mobile device. For instance, a consumer may express interest in a cosmetic product based on printed advertising. With one click of the phone’s camera on the barcode, the consumer can receive rich product information on his or her smartphone, along with a promotion that turns interest into a purchase at a nearby store.

To the retailer and consumer products company, “Apollo” is a marketing management platform that enables real-time interaction with the consumer at the point of decision to inform and influence consumer behavior, drive traffic, increase average spend, enable real-time cross-selling and up-selling, and build brand loyalty through frequent buyer and “social shopping” programs.

On an opt-in basis by a consumer using a mobile device when in a shopping environment, “Apollo” provides the capability to collect rich information on consumer behavior, including who a consumer is (using loyalty card information that a customer takes a photo of), where they are (using the geolocation technology built into most phones today), and what they are looking for (using information gathered when a customer scans the product barcode with the phone’s camera). “Apollo” feeds al of this data into back-end systems to leverage functionality, such as trade promotion management, dynamic closed-loop digital couponing, predictive modeling, and analytics.

With this information, retailers and consumer products companies can interact with consumers on the go, with a very high level of personalization. For instance, a coupon for baby products may be quite valuable to a new parent, but a complete waste of time to a young urban professional. Personalization is the key to influencing consumer behavior simply because it drives the relevance of the information delivered to the user.

To support this personalization, “Apollo” has two components:

A consumer mobile application that delivers context-specific information and special offers to the consumer both inside and outside of the store. Consumers can learn about the service through SAP’s retail and consumer products partners’ websites, email campaigns, or simply signs posted at the entrances of stores. The mobile application is planned for all the major application delivery platforms, like the Apple App Store, Android Market, and others.

A marketing management platform for retail and consumer products companies to which the consumer mobile application is connected. This platform is enabled with an on-demand application with role-based dashboards that marketing and merchandising personnel can use to better promote new or existing products in the store.

“Apollo” enables a real-time, information-based service covering the entire retail or consumer products value chain in a business-to-business-to-consumer approach — from consumer, to product, to retail store. “Apollo” also leverages existing SAP products such as SAP Real-Time Offer Management for real-time promotions, SAP BusinessObjects solutions for analytics, and Sybase mobile solutions for highly scalable infrastructure. This enables SAP customers to interact with their consumers in “real” real-time with the right information depending on the shopping context.

A Win-Win-Win for Retailers, Consumer Products Companies, and Their Consumers

“Apollo” makes all of this possible by enabling retailers and consumer products companies to understand their customers — who they are, what they are looking for, where they are, and when they’re shopping — and then matching the relevant product information, location, and special offers from back-end systems.

With its integration into back-end systems, “Apollo” is more than just a brand-awareness solution. Using this integration, “Apollo” provides real-time data on consumer interest and spending, as well as predictive modeling capabilities for each consumer that produces the best offer for any given customer. The ability to combine inventory forecasting with predictive models in order to maximize revenue per customer and improve operations by aligning consumer demand with the supply chain in real time is unique to “Apollo.” This allows a retailer to dynamically offer and price products that may be overstocked or perishable, for example.

Consumers also share in the benefits provided by “Apollo,” which enables them to:

Find the right product locally

Get better value for their dollar spent

Save time shopping

Consumers receive product matches based on their preferences and purchasing history, along with custom offers based on a large selection of promotions. Recommendations based on real-time location and inventory also help consumers shop more efficiently.

Innovating for Customer Benefit: New Examples

“Apollo” is just one example of a number of new innovations SAP is creating in adjacent markets. Others include:

A business social network of crowdsourced supply chain performance information in the high tech and aerospace industries

Leveraging technology disruptions, offering prototypes in emergent markets early, co-innovating with customers, and iteratively conducting in-market tests, SAP continues to be a strong strategic partner to its customers, addressing their most significant business challenges and helping them meet their growth potential.

A Helping Hand and a Strategic Partner

It is clear that smartphones and tablet devices are transforming the retail and consumer products industries. The rise of mobile devices and new applications provides an opportunity to influence consumer behavior in real time, increase traffic and sales, and strengthen brand loyalty. With “Apollo,” SAP is poised to help retail and consumer products companies seize this opportunity by bridging the needs of their industries and the expectations of savvy consumers. Visit www.sap.com/corporate-en/our-company/innovation/globalbusinessincubator/index.epx to learn more.

Jason Yotopoulos (jason.yotopoulos@sap.com) is Senior Vice President and Head of SAP’s Global Business Incubator, which identifies and accelerates the commercialization of business opportunities alongside SAP’s core business by incubating new initiatives within the company. He was previously Vice President of the Corporate Strategy Group in the office of the CEO at SAP, where he helped drive corporate strategy management and acquisition strategy. Prior to joining SAP in 2004, Jason was a venture capitalist for over a decade and has held product management and business development positions at a number of Silicon Valley technology companies.